The SEC is Coming for Crypto: Should You be Worried?

As you’re probably aware, the U.S. Securities and Exchange Commission (SEC) is on a rampage against cryptocurrencies. For some, it feels like the thorn in our collective side that isn’t going away. With so much scrutiny and negativity surrounding this, is it something you need to be concerned about?

For background, the official reason for the SEC’s interest is investor protection. They see crypto as a Wild West – unregulated, used for criminal activities, and full of fraud and manipulation. Apparently, they are concerned for the safety of investors and their solution is to smash the entire industry with the regulatory hammer.

So what rules is crypto supposedly breaking? 

Well, many projects are accused of being securities, rather than commodities, something they determined using the Howey Test from 1946. The SEC has targeted some of the biggest names in crypto including Binance, Kraken, Robinhood, Ripple and Richard Heart (founder of HEX and PulseChain). They’re also investigating Ethereum, which they had previously labeled a commodity and they’re going after Coinbase, the main custody holder for the Bitcoin spot ETF’s! Many of the players they’ve targeted have actively tried to cooperate with the SEC, but the crypto crusade hasn’t stopped.

So is all this cause for concern, and will the SEC eventually succeed in killing crypto?

In my opinion, absolutely not. Here are three reasons why:

1. The loudest voice isn’t always the most powerful
   The SEC has a very loud voice, but it governs one jurisdiction only – the United States. Their regulations and enforcements are confined within U.S. borders, it doesn’t extend globally.

   Crypto innovation is still thriving on an international scale and many countries are creating diverse environments for crypto growth and adoption. So, while the SEC’s actions are significant, they’re one part of a much larger global story.

2. Another cycle, another FUD narrative
   In every crypto cycle, a new theme emerges that casts a shadow over the industry and becomes the main focus of FUD for that period.

   In 2018, the spotlight was on the clampdown of Initial Coin Offerings (ICOs), a method for startups to raise capital. These became synonymous with scams and dodgy fundraising, so regulatory bodies imposed strict measures, leading to skepticism around crypto and a dramatic reduction in ICO activity.

   Fast-forward to 2022, and we saw the fall of FTX, which sent shockwaves through the community. This event caused people to panic and question even the most prominent crypto platforms.

   Which brings us to today and the battle with the SEC.

   Media coverage has fixated on this narrative, exaggerating the fear and uncertainty. While it makes for compelling headlines and creates short-term turbulence, at the end of the day it’s another FUD narrative.

3. Evolution is inevitable
   There are many reasons the SEC doesn’t want crypto to succeed. It represents true innovation, decentralisation and power to the people. But here’s what the SEC are forgetting: The decentralisation is what ensures it can’t be stopped. The resilience of crypto is built into the very fabric of blockchain technology, so even if the SEC attempts to impose restrictions, the global and decentralised nature allows crypto to continue thriving in other parts of the world.

It’s important to remember that amidst the lawsuits, there have been some very powerful victories for the crypto community. The SEC’s case against Uniswap, one of the largest decentralised exchanges in the world, was tossed out by the judge. And let’s not forget the three-year battle and triumphant victory of XRP/Ripple. We may not hear as much about the wins, but they are definitely there.

If I can leave you with one piece of advice, it’s this: We cannot let noise from the SEC distract us from the incredible opportunity ahead. Regulatory bodies have been throwing their weight around for a long time, even when I first started investing. Can you imagine if I’d listened to the noise and FUD? I would have missed out on three incredible cycles and the biggest wealth-building opportunity of my life so far.

What’s happening may seem concerning, but it’s simply another institution that doesn’t like what crypto represents. When any innovation disrupts the monopoly of large corporations, it’s never a smooth ride.

So, as much as the SEC may stir up FUD, I know that crypto is here to stay. There will always be centralised and decentralised methods to invest, sell and transact. For those of us who believe in crypto, let’s hold strong to our convictions of financial sovereignty and freedom.